Tag Archives: latin america

Entrepreneurship in the Spanish language is most commonly translated as “emprendimiento” coming from the verb “emprender” which means to ignite or start something. For many generations, entrepreneurs in Latin America have started their own businesses for diverse reasons including, as the management thinker Peter Drucker pointed out, a response to a social problem disguised as a business opportunity. A glimpse at the “Rey del Banano” (King of the Banana) rags-to-riches story in Ecuador supports Drucker’s claim; born into poverty, Luis Noboa Naranjo launched the successful Bonita Banana Company after piecing together profits made from sales of newspapers and household items. Noboa later established the Noboa business group; at one time, his business venture was credited for generating 5% of the Ecuador´s Gross Domestic Product.

Nevertheless, an entrepreneurial venture or entrepreneurial economy does not an entrepreneurial society make. It requires something more: not just “igniting” entrepreneurial fires but having the mindset to ensure that the entrepreneurial flame will not die. An entrepreneurial society requires a “growth mindset” – an idea developed over a decade ago by Stanford University psychologist Carol Dweck to explain achievement and success. Dweck compares and contrasts “fixed mindsets” and “growth mindsets”; she concludes that if we focus on learning and improvement as a consistent goal, environment, and the country we are born in, economic realities, as well as adversity or failure, can become powerful impetuses to ensure we grow and overcome pre-conceived limitations to achieving success.

Harkening to the 2016 Olympics currently underway in Rio de Janeiro, an athlete with a “growth mindset” pushes through in order to grow as an individual, an athlete and a citizen representing a nation. They see their failures as a call to further action and continuous training; in other words as a “not yet” rather than a “not ever.” There are clear parallels in athletic training to Drucker’s own words describing an entrepreneurial society where “innovation and entrepreneurship are normal, steady, and continuous.”

For an entrepreneurial society to prosper, members need growth mindsets to consistently keep the entrepreneurial flame alive and support those willing to push the limits of an “employee” society in order to find solutions to the world’s problems. Peter Drucker saw entrepreneurship and entrepreneurial culture as the lifeblood of society (Innovation and Entrepreneurship: 1985). He heralded a new era that would see a shift from an employee society towards an entrepreneurial society. In Latin America, where I live and work, “emprendedores” are igniting entrepreneurial fires with creativity, innovation and problem solving skills; yet the region – like many other major trading areas in the world – continues to call for a growth mindset from members of society that would lead us through economic and political instability and clear past the “same-old” power dynamics.

Global discussions around “entrepreneurial society” must be inclusive with ideas from developing as well as developed countries, public and private counterparts, local and international companies, thinkers and managers, students and teachers, entrepreneurs and intrapreneurs, CEOs and investors. If an entrepreneurial society is to flourish, we need a “mindset” of constant learning and growth supported by connections across real and psychological boundaries. In every corner of the globe, adopting a growth mindset together with learnings from larger discussions of entrepreneurship and transformation, will help us move to a society of creators, co-creators and organizations that respond ethically, empathetically and effectively to the societies we serve.

In international business, like in politics, local guides or experts are key to obtaining advantages in new markets. Here, two excerpts from the Art of War:

Sun Tzu:

Those who do not use local guides are unable to obtain the advantages of the ground.

Li Chang:

We should select the bravest officers and those who are most intelligent and keen, and using local guides, secretly traverse mountain and forest noiselessly and concealing our traces…we concentrate our wits so that we may snatch an opportunity.

It’s 6:45 a.m. and I am in the office. There is a cool calm in the morning before the rush of activity. There is a peace that comes with knowing the whole day is before you and what happened yesterday, happened yesterday.

A similar feeling is enjoyed at the beginning of a new year – a sense of new beginnings, new dreams, new projects combined with the wisdom of yesteryear.

This blog – since it was conceived over 3 years ago – was a platform for my consulting business, Hipona Consulting. It has turned into a place to express business endeavors, learnings from key projects and weekly inspiration in the form of quotes and photography.

This blog will continue. It may take a new form – as a new year takes form and the morning sun burns on the horizon – but it will continue.

A wise woman – my sister Dr. Leah Clark – told me some time ago that consistency is key in blogging. I cannot agree more! Therefore, weekly posts will continue as I share the journey of Hipona Consulting and the challenges (and opportunities!) that come with doing business in Latin America, a women exploring leadership excellence (in the form of corporate governance and organizational leaders) and being an entrepreneur in an unforgiving world.

A new day. A new year. Happy 2016. May the writing and exploration begin!

Our society was founded on great movements with visionary leaders that embraced the essence – and benefits – of forgiveness to build relevant communities, businesses and families.

There are many leaders that choose forgiveness over revenge, hate or indifference; the Civil Rights movements in the US, the anti-apartheid movement in South Africa and Gandhi’s peaceful revolution were all sparked by a shared belief in non-violent protest to change the status quo. Forgiveness can cross geographical, religious, racial, social, political, and economic barriers. It can even transcend time. Leaders like Nelson Mandela, Mahatma Gandhi and Martin Luther King became incredibly powerful by choosing to forgive. They forgave to be at peace with the present. Whatever happened to them or to their ancestors, they did not believe that ignoring the problem or encouraging hate was the answer. The answer, for them, was forgiveness; it was an action they could take – and they encouraged others to take – that would have a positive influence on a better future. The profound act of forgiveness made them visionary leaders.

I live in South America and far removed geographically from recent events in Europe and Asia. Nevertheless, I know community and business leaders who are victims of crime, of discrimination and of corruption. Some of them live with the expectation that the same negative things will happen to them again and some believe that their future can be different. It could be described as the difference between the fixed and growth mindsets. Naturally, there are also those people that are on the fence about their future; like most human beings, they experience moments when they are positive about the future and others when they keep thinking about the immitigable risks. I believe the gap between the two groups of people (or different feelings within the same person) is bridged by a simple phrase: “I forgive.”

“I forgive” is about creating peace with the present so that we can be open to new experiences. Forgiveness is personal because it has an impact on our lives even if the event happened long before we were even born or only yesterday. Making peace with ourselves and with people around us means acknowledging these terrible things – directly or indirectly – and making the decision that while events like these define part of our lives, they are not all defining, all-encompassing and all being. Human beings are bigger than the terrible things that happen to us and we can make change happen. Things can be different. Just like the brave leaders mentioned before, we don’t have to accept the status quo.

Maybe, just maybe, it is cool, it is relevant, and it is positive to forgive.

If we restore the word forgive to our vocabulary and to our lives, we can use it as an opportunity to build healthier businesses, communities and families. If we talk about building a better future for our children or future generations, forgiveness must be part of it.

Now, more than ever, the power of collaboration is manifesting itself across space and time. Digital tools are helping us to create connections between seemingly disparate interests and to solve problems on a global scale. Nevertheless, in regions in development and, in particular, in Latin America, there exists a range of problems in the public and private sectors that could be solved through collaboration, innovation and excellence. Problems such as energy generation, response to natural disasters, and high school desertion to name just a few. Design thinkers say that collaboration is viable when there is a better understanding of users, a relevant place to prototype ideas and the built-in motivation to implement those ideas. If you turn this around, it holds true that if you don’t have these three elements, collaboration – and the viability of using “community” to solve problems – may just be impossible. What is happening in Latin America, then, to make “community” viable? Perhaps a closer look at these three elements can help us see why the region is falling short.

First, when we better understand users, we can better address needs and design a product or service that fits those needs. Seems simple, but implementation of this element is difficult in high context cultures such as those that exist in the majority of countries in Latin America. In cultures that encourage alignment with social status and formal social rules, understanding users – and users in multiple interest groups – is a challenge. It involves using interviewing techniques and empathy to gain a complete understanding of stakeholders and usage. Understanding what question to ask and being able to bring the answer from various areas into context, helps form an accurate picture of users and their needs. Striving for a better understanding of users – and using multiple research methods in order to overcome cultural characteristics – is key in solving users’ problems.

Second, designing solutions must be an interactive process. We will always need a place to work with stakeholders, test assumptions and take risks. This is why innovation centers sometimes fail: they need to work with community and not in isolation from them. Nevertheless, innovation centers in Latin America specifically are extremely useful in fostering more cross functional collaboration and mitigating some of the risks associated with large scale innovation investments in developing countries. Multinationals Dupont and BBVA as well as “multilatina” Stefanini have successfully gained insights and new products through their centers; illustrating that while innovation centers may have their drawbacks, they can be a relevant place to prototype ideas.

Finally, motivation must be present at the idea implementation phase. This means that while we may have a prototype or project, there is always more work to be done in implementing the idea. What can help with the successful implementation of the idea is community. As the old saying goes, people are more committed to that which they help build. If communities are collaborating on ideas that benefit them; they will have a higher successful implementation rate. There is also the possibility for the ideas that spread. Like a TED Talk, a good idea can spread and be implemented much faster when members of community that will benefit from the idea get involved and share their passion around a solution.

Is community viable? Yes it is. But seeing collaboration for what it is – working towards understanding users, engaging users and prototyping with users in the Prototype-Pilot-Product triad – makes community collaboration viable. In Latin America in particular, understanding these elements and their unique challenges in our region, is essential in community viability.

You don’t climb mountains without a team, you don’t climb mountains without being fit, you don’t climb mountains without being prepared and you don’t climb mountains without balancing the risks and rewards. And you never climb a mountain on accident – it has to be intentional.

Called ontological design, it is a concept that considers how context and environment shape our ideas. Spaces where we work impact our work. Colors make us feel more creative or more restricted in our thinking. Furniture design can impact how we interact with our clients. Spaces with hammocks and green plants can help employees feel playful and encourage new ideas and approaches.Where we do business affects how we do business (and vice versa).

Our experiences are subjective and they can be influenced by our environment. I am reminded of a quote by the famous Canadian philosopher Marshall McLuhan who said:

“We become what we behold. We shape our tools and then our tools shape us.”

We often talk about this quote in terms of technology, yet there is so much more to what McLuhan says here. We are natural creators, born to create but also born to become part of the reality we construct and influence with our art, science and business.

Latin America has tremendous, and growing, purchasing power—due in part to economic giants like Mexico and Brazil—yet this has not led to strong innovation capabilities. While exceptions always exist, for the most part Latin American firms and subsidiaries are limited in their ability to develop innovations that make a global, let alone regional, impact. As practitioners in innovation and business leadership in Latin America for more than 15 years, we believe that one solution is innovation centers, similar to those that exist in developed countries.

The two groups with the most potential in the region are the multilatinas (Latin American multinationals) and the subsidiaries of large international corporations. However, both are currently underperforming. In a 2013 report, the World Bank states that Latin American subsidiaries are less innovative than their counterparts in other emerging markets. In the case of the multilatinas, other research has found that they too are much less innovative than other emerging market multinationals.

Why does the region fall short? In part, the problem is a lack of needed structural elements, such as intellectual property protection, access to capital, and open markets across the region. A shortage of skilled—particularly tech-savvy—workers, and a concentration of government-owned companies in the services industry also present challenges for innovation. In fact, the World Bank states that public sector dominance in the services sector might be the single most important factor impeding higher innovation levels in Latin America.

While these structural elements will ease over time, innovation centers offer a viable—and immediate—solution to fostering innovation today. The idea behind innovation centers is to be “living labs” that bring together cross-functional talent in an environment conducive to risk-taking therefore leading to improvements in an organization’s operations and development of new products and services. Internationally, companies as diverse as Capital One, Aetna, and Nordstrom, are using innovation centers to develop new processes and new ways of connecting with customers.

Within Latin America, Dupont is an early leader in the use of innovation centers; its facilities in Mexico and Brazil have led to collaboration across various industry sectors, with both public and private partners. In one notable result, Dupont’s efforts in Brazil led to the development of locally manufactured, bullet-resistant body armor used by police and security personnel.

We looked at two companies—one multinational subsidiary in the region and one multilatina—to discover the results of these innovation centers and what lessons we can learn from them. The first company, BBVA, is a multinational banking group based in Spain with a strong interest in overseas expansion, particularly in Latin America. The bank has developed a plan to become the leading digital bank in the region, investing more than $2.5 billion over four years; 40 percent of this investment is allocated to technological projects, including innovation centers.

The company’s strategy is to insert its centers as close to its customers and the business and entrepreneurial hub of a given country or area as possible, so that it can tap into local insights and issues, in order to develop the best solutions. BBVA’s innovation center in Bogota is the first such facility in the banking sector in Colombia, the second that BBVA has opened in Latin America—along with Mexico—and the company’s third worldwide (the first was opened in Madrid in 2011).

The center in Bogota has both laboratory and ideation space and the center’s goal is to function in part like a mini Bell Lab: a pocket center for basic research on digital banking applications in Latin America, with the objective of developing new products and cross-functional solutions for BBVA’s customers. It relies on BBVA’s corporate innovation center in Spain for its strategic direction as well as financing. All three of BBVA’s centers also host workshops, contests, and conferences with select groups inside and outside the BBVA world; fostering innovation beyond the banking industry—and beyond the region of Latin America.

BBVA points to a continuous succession of innovations; the next generation ATM called ABIL is one example of BBVA’s efforts. The ABIL is a result of studying how consumers behave at BBVA’s ATMs in Mexico, Spain and the US. BBVA’s focus on innovation – and innovation centers – is working by creating new customer centric products and services.

The second company we looked at, Stefanini, is a multilatina founded in Brazil in 1987 that provides IT services worldwide. Stefanini currently runs an innovation center in Brazil that focuses on key trends in cloud computing, big data, social media, and mobility, where it hopes to define areas of synergy with operations and business verticals.

Stefanini has notable M&A activity in the last five years; among Stefanini’s recent acquisitions are Brazilian start-up Document Solutions in 2009, US-based TechTeam Global in 2010, credit card processing company Orbitall and core banking solutions firm Top Systems in 2012. Their innovation center is used to foster learning and idea exchange across various units and companies within the Stefanini organization. According to Stefanini, a portion of $400 million is earmarked for innovation projects in the next three years; projects that are essential to the “business” side of Stefanini and not just development of technology itself.

While some companies may not have an innovation budget like Stefanini o BBVA, many of their lessons can apply to fostering innovation in companies and in a region, like Latin America, that does not necessarily have an “innovation reputation”. To achieve similar successes, there are four basic guidelines that companies should follow.

1) Focus on talent: innovation centers help connect companies with talent that might not otherwise be discovered and developed; this talent may be a result of a company acquiring a strategic resource or company through an M&A (as is the case with Stefanini) or an organization’s proximity to entrepreneurial and business ecosystems (as is the case with BBVA).

2) Take an open approach to innovation: innovation centers are “living labs” and therefore should foster innovation in a cross functional environment conducive to risk-taking and integrative thinking; centers should be open to insights gained through collaboration with their stakeholders; BBVA’s ABIL is a good example of co-creation and their openness to community interaction through events and contests is also noteworthy.

3) Test and prototype: centers enable organizations to successfully administer the Prototype-Pilot-Product triad and manage cost and risk without directly impacting the company’s core business; in other words, putting products and services in front of people – and having them interact and “play” with them – can provide rich feedback before rolling out the innovations on a larger scale.

4) Focus on small “wins”: as we have mentioned, the Latin America region is characterized by lack of access to capital and public sector dominance in certain industries. Our last guideline illustrates why innovation centers work so well in this environment: they focus on effective innovations – small “wins” – that have the potential to be scaled in the region given the right conditions and early successes.

Can innovation centers be the catalyst for increasing investment in innovation and changing our view of innovation in Latin America and in emerging markets? We believe that by fostering more cross functional collaboration and mitigating some of the risks associated with large scale innovation investments in developing countries, innovation centers have enormous potential to make a positive impact on the future of business growth in the region.

Authors:

Diego Vallarino is Managing Director at BEXTON Research, a Latin-American Innovation and Management Research Boutique. He is author of “Innovation from the South: How Latin American companies face new competition” (2005). PhD in Business History, GCP (Wharton), SEE (Babson), MBA IP (Adolfo Ibáñez). Follow @diego_vallarino

Esther Clark is the business and strategy lead at Hipona Consulting, a niche firm that specializes in Latin America in areas related to strategic communications, corporate governance and marketing. Follow @ClarkEsther

Strategy and Business published a piece on doing business where governance is weak. They talk about how to succeed in markets that are prone to ethical and legal risks and focus their article on examples in Asia and the Middle East. It’s a fascinating read and one that illustrates principles for doing business that can be applied to our region of focus – Latin America.Embed from Getty Images
Here are six of those principles that are crucial to doing business in Latam:

1) align vision and values – this is about ensuring that all stakeholders – from board members to business unit leaders – share the company vision and their corporate values which includes ethical behaviour and how to deliver a product or service in the region. This is particularly important when managing country operations from headquarters outside the region (e.g. from the US or Europe).

2) understand the “way to play” at the local level – uniquely local ways to play exist and should be planned for. How relationships are built and how local talent is utilized is extremely important when contemplating success in Latin American markets.

3) identify key stakeholders – as mentioned in earlier blog posts, it’s important to identify who are the people that are decision makers and influencers in your industry and in the environment in which you operate.

4) build your brand – look at ways to engage your clients with your brand specific to the market. Understand your brand personality at a corporate level but tailor it to your market. You can minimize risk in Latam and emerging markets by having a strong brand that connects to users on many different levels.

5) stay vigilant – empower your local team but stay vigilant of what is going on. Tapping into resources like your country/Embassy trade representative or local expertise can help you stay in tune with local developments. Ensure that vision, values and company policies are not compromised.

6) adapt the governance model – this is the final suggestion from the writers of the article and it’s something that Hipona Consulting strongly recommends whether your company operates internationally or locally. It’s about making sure that members of your board represent the diversity and dynamic characteristics of your company, stakeholders and market. Local board members or committees can help connect the company’s interests to local interests and at times can prove very valuable to getting ideas – and company vision – across.